School of Economics

2012 Discussion Papers


School of Economics Discussion Paper 12/11

June 2012


The Financial Market Impact of

UK Quantitative Easing

Francis Breedon, Jagjit S. Chadha and Alex Waters

University of London and University of Kent



After outlining some of the monetary developments associated with Quantitative Easing (QE), we measure the impact of the UK'’s initial 2009-10 QE Programme on bonds and other assets. First, we use a macro-…finance yield curve both to create a counterfactual path for bond yields and to estimate the impact of QE directly. Second, we analyse the impact of individual QE operations on a range of asset prices. We fi…nd that QE signi…cantly lowered government bond yields through the portfolio balance channel – by around 50 or so basis points. We also uncover signi…cant effects of individual operations but limited pass through to other assets.

JEL Classification: E43; E44; E47; E58


Keywords: Term Structure of Interest Rates; Monetary Policy; Quantitative Easing


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